Bank’s new green indicator: “genuine nonsense”?

15 December 1999

A new Bretton Woods Project report examines the World Bank’s new measure of national sustainability, genuine savings. The genuine savings approach tries to provide a combined measure of changes in all of a country’s “assets”: economic, human, natural and social. Genuine savings figures are just beginning to be used in a range of World Bank publications and there are indications that it may provide a pillar of new initiatives such as the Comprehensive Development Framework.

The Bretton Woods Project briefing argues that the heroic attempt to compress broad changes in a country into a single figure is a failure because of conceptual, data and other inadequacies. These include a bias towards quantification and monetisation, and a “weak sustainability” assumption that economic, natural and human assets are substitutable. The short briefing, which gives many references to other work in this field, quotes leading Spanish environmental economist Joan Martinez-Alier describing the Bank’s work as “genuine nonsense”.

The Bank’s most detailed case study work on genuine savings has been on Ecuador, arguing that that country should have invested more of its oil earnings in education. Ecuadorian economist Fander Falconi, whilst agreeing that this finding is “useful” finds the Bank’s study simplistic and problematic, for example by overlooking South-North resource flows.

The Bretton Woods Project briefing is available on the website.

The World Bank’s Genuine Savings work is explained in the World Development Indicators or on www-esd.worldbank.org/eei

Fander Falconi’s article is in the December 1999 edition of Ecologia Politica, Barcelona.